Naspers agreed to buy a majority stake in Russia’s largest classifieds site Avito for $1.2 billion as Africa’s biggest company increases its exposure to the country’s online-retail market even as the economy remains in turmoil.
The media group will increase its stake to 67.9% from 17.4%, Cape Town-based Naspers said in an e-mailed statement on Friday. Stockholm-based Kinnevik is selling its 31% stake in Avito to Naspers for $846 million as part of the deal, the Swedish company said. Naspers also owns a 29% stake in Mail.Ru Group, Russia’s largest operator of social networks.
“The Russian e-commerce market is expected to grow significantly, with more people gaining online access,” Naspers chief executive officer Bob Van Dijk said. “Over time, e-commerce ratios should move in line with other large countries.”
Naspers, the owner of Africa’s biggest pay-TV service, has expanded through acquisitions of stakes in early-stage technology companies in emerging markets around the world. The company owns a 34% shareholding in Tencent Holdings of Hong Kong, which at about $61 billion accounts for almost all of the South African company’s market capitalisation, and has said it’s looking at more opportunities in the Internet advertising and e-commerce markets.
“This is a huge deal given an economic slowdown in Russia,” Konstantin Belov, an analyst at UralSib Capital, said by phone. “Still, Naspers is operating on emerging markets and is probably more resilient to Russian risks than other investors. It may consider further integration of its Russian assets.”
There are no plans to merge Avito with Mail.ru, Naspers spokesman Meloy Horn said by e-mail. “Mail.ru has a strong focus on communications and entertainment, while Avito is a pure marketplace where people transact for their mutual benefit,” he said.
Naspers shares gained 2.44% to R2 030.62 at the close in Johannesburg, the highest since April 13. The company is valued at R841 billion ($63 billion). Kinnevik stock rose as much as 5.5%, the most since February 12, and traded 5.4% higher at 271.3 krona in Stockholm.
Avito allows customers to buy everything from TVs to sofas and cars and is thriving despite a squeeze on Russian consumer spending as shoppers seek out cheaper deals. With about 26 million visitors in July, Avito is among the the country’s top-10 most popular websites, according to researcher TNS. Russia’s economy has been hit by falling crude oil prices and the devaluation of the ruble.
Avito is prepared for a possible initial public offering, the company’s Swedish chief executive officer and co-founder Jonas Nordlander said earlier this month. The company has adapted internal controls and procedures to meet listing requirements for larger markets, including the US, he said.
©2015 Bloomberg News